Holland House Property Investments Limited V. Norna Forsyth Crabbe+j. Euan Edment
| Jurisdiction | Scotland |
| Judge | Lord President,Lord Kingarth,Lord Clarke |
| Neutral Citation | [2008] CSIH 40 |
| Court | Court of Session |
| Published date | 02 July 2008 |
| Year | 2008 |
| Date | 02 July 2008 |
| Docket Number | XA35/07 |
| FIRST DIVISION, INNER HOUSE, COURT OF SESSION | |
| Lord President Lord Kingarth Lord Clarke | [2008] CSIH 40 XA35/07 OPINION OF THE COURT delivered by LORD CLARKE in APPEAL From the Sheriffdom of Glasgow and Strathkelvin at Glasgow in the cause HOLLAND HOUSE PROPERTY INVESTMENTS LIMITED Pursuers and Respondents; against NORNA FORSYTH CRABBE and J. EUAN EDMENT Defenders and Appellants: _______ |
Act: Weir; Semple Fraser (Pursuers and Respondents)
Alt: Sandison; Anderson Strathern LLP (Defenders and Appellants)
2 July 2008
Introduction
[1] This is an appeal against an interlocutor of the sheriff principal of Glasgow and Strathkelvin of 16 January 2007, whereby he adhered to an interlocutor of the sheriff at Glasgow by which interlocutor the sheriff had granted decree against the defenders for payment to the pursuers of the sum of £49,725, with interest from the date of citation. The principal sum in question represents backdated rent said to be due by the appellants under a lease of premises occupied by them as tenants at 92-94 Bath Street, Glasgow of which the respondents are the landlords.
The context of the dispute
[2] The lease between the parties is contained in a Minute of Lease between Clydesdale Bank plc (the original landlords) and the appellants dated 12 and 19 August 1982. Clause FOURTH of the lease is, inter alia, in the following terms:
"Notwithstanding the foregoing provisions of this Minute of Lease with a view to ensuring that the rent payable hereunder shall from time to time be adjusted so as to be a fair market rent, the rent so payable shall be subject to review at the instance of the Landlords at the first rent payment term immediately following the fifth anniversary of the date of entry and at the same term in each fifth year thereafter up to and including the twentieth year of this Lease and at the same term in every third year thereafter (hereinafter called 'the relevant term') and such review shall be effected only in accordance with the following provisions:-
(a) The Landlords shall give to the Tenants three months written notice
prior to the relevant term of their intention to exercise their right to require a review of rent. Such notice shall specify the rent which the Landlords propose as the fair market rent at the time in lieu of the rent then payable hereunder (hereinafter called 'the current rent') and in the event of the Tenants not accepting the rent specified in the said notice as the fair market rent at the time they shall within the period of twenty-one days after receipt of the notice intimate in writing to the Landlords to that effect. Failing such intimation the rent payable under this Lease shall from and after the relevant term be the rent specified in the said notice.
(b) In the event of the Tenants not accepting that the rent specified in the
said notice represents the fair market rent at the time such rent shall be fixed, failing agreement, by an independent surveyor to be nominated, failing agreement, by the Chairman for the time being of the Scottish Branch of the Royal Institution of Chartered Surveyors on the application of the Landlords. Such surveyor shall determine the fair market rent at which the premises might reasonably be expected to be let at the relevant term and disregarding any effect on the rent of any additions or improvements to the premises made by and at the expense of the Tenants otherwise than in pursuance of an obligation to the Landlords in terms of this Lease. The certificate of such surveyor as to such rent shall be final and binding on the parties to the effect that in the event of the rent specified in the said certificate being more than the current rent the rent specified in the said certificate shall become the rent payable under this Lease from and after the relevant term, the whole other terms and conditions of this Lease remaining in full force and effect. In the event, however, of the rent specified in the said certificate not being more than the current rent, the current rent shall continue to be the rent payable under this Lease from and after the relevant term. The whole cost of having fixed as aforesaid the rent payable under this Lease shall be borne by the Tenants.
...
(d) Unless and until the rent payable under this Lease is varied in
accordance with the foregoing provisions of this Clause the current rent shall continue to be the rent payable under this Lease and within seven days after the rent has been so varied (if such date be later than the relevant term) there shall be an accounting between the parties in regard to any underpayment of rent in consequence of a variation of rent as aforesaid".
The rent due under the lease was due to be reviewed as at the 15 May 2002. The parties were unable to reach an agreement as to the fair market rent. They therefore invoked the provisions of Clause FOURTH (b) and an independent surveyor, Mr. Fraser Clearie, was appointed to determine the fair market rent. Mr. Clearie issued his rental determination on 9 June 2005. The sum sued for in the present proceedings represents the backdated rent due at the date of the raising of the present proceedings if Mr. Clearie's determination is binding on the parties. The appellants contend that Mr. Clearie's determination is not binding on them because Mr. Clearie was, in carrying out the exercise he did, acting as an arbiter and in performing that role he, it is said, breached the rules of natural justice. The appellants, accordingly, seek to have the determination set aside ope exceptionis. Before this court their position was that a proof before answer should be allowed for the purposes of establishing whether or not their contentions fell to be upheld.
[3] The sequence of events leading up to Mr. Clearie's determination were as follows. By letter of 4 March 2005, addressed to representatives of the respondents and copied to the appellants' representative (and apparently in response to a letter of 22 February 2005 from the respondents' representatives, which letter was not lodged in process), Mr. Clearie wrote as follows:
"I refer to Mrs. Taylor's letter of 22nd February and confirm that I am willing to provide a rental determination in accordance with your request, but I am unwilling to place a limit (at this stage) on the level of fees that my legal advisor may charge. If it is necessary to seek legal advice, I would propose to consult Paul Hanniford of Semple Fraser. In the past I have found his charges in matters of this nature to be modest but until all the issues are aired, it would be unduly onerous to present him with a budget, particularly one as low as £500 plus VAT.
On the basis that the foregoing is acceptable to the parties I have prepared Terms of Engagement for your consideration and these are attached. I noted your desire to present me with Submissions today with Counter Submissions in 14 days time but as there [has] been no indication whether this was acceptable to the Tenants, it seems only fair to have a short delay. Accordingly I suggest that Submissions should be presented no later than 5.00 p.m. on 1st April 2005 with Counter Submissions 14 days thereafter. The Terms of Engagement includes these dates however if both parties would prefer please indicate this writing (sic).
I trust that the foregoing is acceptable and look forward to hearing from both parties to that effect. When responding, please clarify who will be responsible for my fees etc."
The attached Terms of Engagement, referred to in that letter were in the following terms:
"1.0 Unless I am immediately advised in writing by the parties to the contrary, my valuation will be on the basis that:-
(i) the property is free from latent and inherent defects, that no
deleterious materials have been used in its construction and that it is not built on or affected by contaminated land, and
(ii) complies with the relevant planning and other statutory
regulations and requirements, and
(iii) the only relevant tenancy document is a Deed between
Clydesdale Bank plc and Michael Crabbe Hodge, Norna Forsyth Crabbe and Alexander Charles Reid.
2.0 The Deed entitles the parties to make representations on rental and I am obliged to take cognisance of these. The procedure I propose to adopt is as follows:-
2.1 It would be helpful if the parties would produce an agreed Statement of Facts Not in Dispute. It should contain a description of the subjects, floor areas, planning consents, lease use rights, and if applicable, any tenant's improvements which have to be disregarded.
2.2 In the event of there being any matters on which I require to seek a technical or legal opinion, I will first advise both parties, give them an estimate of the fees involved and ensure that my consultant or solicitor, who I may wish to appoint does not have a conflict of interest.
2.3 No correspondence or documents of a privileged nature should form part of either Representation or Counter-Representation.
2.4 It would be helpful if supporting evidence and comparables in the Reports and Replies are corroborated in writing, and provided in a detailed manner.
2.5 Reports should be lodged with me by 5.00 p.m. on 1st April, 2005. They should contain the Valuer's opinion of the rental value of the subjects in accordance with the terms of the lease together with appropriate supporting evidence. The Representation should be made in duplicate and I will pass one copy of each party's Representation to the other party.
2.6 Replies containing comments upon the initial written Representations are to be lodged with me by 5.00 p.m., 15th April, 2005. The Reply should not contain any representations or evidence other than in rebuttal of the points made in the opposing parties (sic) initial representations. I will exchange Replies.
2.7 I would remind the parties of the obligations and responsibilities imposed upon chartered surveyors if purporting to act as Expert Witnesses, all as referred to in the...
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